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The Secrets of Sponsorship Valuation: Key Factors to Consider for Accurate Evaluation 

by | November 13, 2023

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  • The Sponsorship Collective has worked with over 1000 clients from every property type all over North America and Europe, working with properties at the $50,000 level to multi-million dollar campaigns, events and multi-year naming rights deals
  • We have published over 300 YouTube videos, written over 500,000 words on the topic and published dozens of research reports covering every topic in the world of sponsorship
  • All of our coaches and consultants have real world experience in sponsorship sales

Not to make you nervous, but the success of your sponsorship program hinges on a fair valuation. Boosting your worth to the moon makes you feel good at the moment but will result in refusal after refusal from prospective sponsors.

Playing it too safe and charging low will lead to sponsorship deals where they benefit more from the arrangement than you. 

So how do you value properly? I’ve put together this piece with a collection of key factors that must be on your shortlist as you begin the valuation process. This can change how you value your sponsorship properties moving forward!

1. Customization 

Before we begin, I have a question to ask you. Have you had a discovery session with your prospect yet?

If you answered yes, continue reading. However, if you answered no, stop valuing. You’re not ready for this step yet.

A sponsorship property must be customized according to the prospect’s needs. You will find yourself taking shots in the dark and having precious little to show for it if you don’t bookend your valuations with a discovery session first.

The discovery session is your glimpse into a sponsor’s insights that you cannot glean elsewhere. Sponsors will not divulge marketing and sales shortcomings in press releases or on their website the same way they will during the discovery meeting.

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If you go into a discovery session having already valued your assets, you’re not offering anything unique to the sponsor. Your assets have little bearing on the sponsor’s challenges and are worth very little.

Sponsors will not pay you the tens of thousands you’re asking for because your sponsorship property brings nothing particularly helpful to the table. Instead, you will receive an offer for thousands, and not just from one sponsor, but each on your prospecting list.

Once you begin having discovery sessions, understanding the sponsor’s challenges, and tailoring your activations and assets to them, you will notice that prospects are usually willing to pay you a lot more money.

However, do not mention in your sponsorship proposal or package that you’ve customized your assets. This comes across as very amateurish. It can go without saying because it will be evident you have custom assets.

2. Audience Alignment

The next factor that goes into an accurate sponsorship valuation is audience alignment. 

You might ask, what does your audience have to do with selling assets and activations? The answer is everything. 

There is no single more valuable asset on your list than your audience. However, most sponsorship seekers fail to realize this because you don’t value your audience the traditional way.

You can’t exactly compare your audience against market value when the value of each audience varies so drastically. You could ask two sponsors what your audience is worth, and they would have varying answers depending on the type of sponsor and the opportunity. 

You’re in charge of coming up with the cost of most assets and activations you value, but your sponsor must choose the value of your audience. 

You must have a wealth of audience data to help them do that. Let me share an example with you to show you why.

Imagine you have a valuable piece of jewelry you recently inherited from a family member. Well, at least, you believe it’s valuable. You bring it to a jeweler, and they begin asking you questions about it.

What brand is the jewelry? You don’t know. Are the diamonds authentic? You aren’t sure. Is it real gold or cubic zirconium? You haven’t the foggiest.

Since you can’t provide that much data about the jewelry, you aren’t getting the full value. 

Your sponsor wants to know as much about your audience to see if they can find alignment between your customers and their target audience. The more data you can present them to help in that determination, the better.

You cannot merely divide your audience by basic demographics and geographics and think that’s enough. You must be ready to go in-depth and add psychographics to the mix, digging as deep as you can get there. 

You must know what makes your audience tick, and the only way to do that is to survey them. Ask the kinds of questions you have little to no data on, such as what specific jobs your audience works, how much they earn, what kinds of events they attend, and which brands they’re the most loyal to.

These are the kinds of questions that will result in usable data your sponsors want to see. When you can tell them that 20 percent of your audience earns between $85,000 and $110,000 per year and has attended five events in your industry within the last 12 months, your sponsor can very easily ascertain your audience’s value.

3. Market Value 

The next substantial factor you must consider when valuing your assets is market value.

What exactly is market value? It’s the average value of something.

For example, the market value of a DVD is $5 to $20. Like many things, it doesn’t have just one price but depends on points like quality (new movie or old one?) and scope (full television series or just one season?). 

So, if your asset were DVDs (just go with me here), you would research to determine the market value, then compare that price against your DVDs. Are they better? Longer? More complete? Higher quality?

I’ll talk more about this in the next section, but I wanted to provide that overview so you understand how valuation works in full.

It’s easy to determine the market value of a DVD, an apple, or a gold wristwatch. However, when you ask someone to gauge the value of an intangible object, such as a social media post or a speaking engagement, they freeze.

That’s a fair reaction, don’t get me wrong. It’s much harder to determine the value of intangible assets, but not impossible.

The market data is out there. You can use calculators to determine what your social media posts are worth and Google to gauge what to charge for a speaking arrangement.

4. Service Quality

Valuing isn’t just researching the prices of services. That’s only half of the equation. The other is gauging your service quality with a clear, honest, opaque lens. 

Sponsorship assets should be a collection of your strongest abilities. You’re recommending assets and activations that can drive change, so they have to be good.

For example, imagine if you were part of a sales team. Would you try that new sales tactic you don’t feel confident in? I doubt it! Likewise, if you were part of a marketing team, you would hold back and re-evaluate before launching a campaign with points you didn’t understand. 

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You should only offer assets that your company or organization already excels in. You don’t want to have to learn how to code a website after the fact because you excitedly told your sponsor you know how to code when you don’t. 

However, there’s a difference between saying you’re good at social media posts versus being one of the best. Your service quality is a major determining factor in what you’ll charge in your valuation, so be honest.

As you create your assets list, sort those assets that are the best examples of your property and prioritize them.

5. Originality

This might seem like a strange quality of an accurate valuation, but it isn’t. 

As you research the prices of your sponsorship assets and activations, you will likely come across sponsorship valuations performed by other properties and posted online. Some might be case studies, while others are available for sponsors to find.

Inexperienced sponsorship seekers sometimes take these valuations, either entirely or in part, and use them as the inspiration for their own valuations.

This proves tremendously detrimental. I’ll discuss this more later, but sponsors want to know where your numbers came from, and few sponsorship seekers are willing to admit they stole their valuation data from some random source on the internet. 

However, being unable to tell the sponsor how you came up with your data is truly the least of your worries. Copying numbers without assessing their fair value according to your service quality often leads to overinflated numbers.

You’ll recall that sponsors want nothing to do with overly expensive sponsorship properties with high costs just for the sake of it. They want marketing outcomes and will pay if someone can deliver them, but jacking up the costs of everything is the mark of an amateur. 

You also don’t know if the valuation you found was done correctly, so following those numbers verbatim could result in you earning less than you should because you undercut yourself. 

By all means, use other valuations as inspiration. You can even incorporate them into your market research but don’t use them as your sole source of market research. Also, use your assets, not random ones you found online. 

Your activations and assets suit your sponsorship property, so they’re valuable for that reason.

6. Fairness and Honesty 

Let’s talk more about the integrity of pricing, shall we? 

You’re the one who determines your sponsorship value, not your sponsor, not your vendors, and not any other partners. The cost of your sponsorship property should be the total of your assets and activations, which you should determine by market value and your own moral compass.

I’ve already decried the outcome of boosting your sponsorship property value too much. However, just in case you need one more reminder, here it is again. 

Sponsors have worked with many companies, individuals, and organizations before you. They have a general idea of how much a service should cost and know when the price is higher than it should be.

It’s one thing if you have a record of amazing service to back up your costs. However, most sponsorship seekers don’t. They either don’t know what their assets should be priced or assume that asking for more is the way to go, regardless of service quality.

However, imagine if your favorite restaurant began charging more for each dish. Nothing has changed. The quality is the same, the serving size is the same, but the price is higher. 

Would you keep going to your restaurant or find a new favorite? Probably the latter, right? That’s exactly how a sponsor feels. 

They’ll keep looking until they find someone with prices more in their wheelhouse. 

I’m not recommending you keep all your prices low. I’m merely advocating for fairness.

Increase the price of the assets and activations you’re excellent at, and keep the prices lower for those services you’re not as great at.

7. Showing Your Math

As promised, I want to wrap up by discussing the value of showing your math. Sponsors will ask where your numbers came from, so you should have some method of showcasing how you concluded what your assets are.

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You don’t have to show them every last internal facet of the process, but an overview. This drives forward the goodwill that fosters a positive working relationship between you and your sponsor.

It’s also good practice for future sponsorship endeavors. You can refresh your memory by reviewing how you determine asset value and use that method for your next sponsorship property. Or, who knows? You might decide to change it up. 

Improve Your Valuation Measures with Our Services 

Sponsorship Collective’s team of valuation efforts can reduce the uncertainty and guesswork that can accompany valuations. We understand valuation success and have helped our clients overcome the valuation hurdle so they can negotiate with sponsors  and ensure a strong working relationship. 

Focusing your efforts on improving valuation will help you work on other sponsorship areas that can often cause deals to fall through.

For example, you might not know what to offer sponsors, or you don’t know who your audience is. You might also use stock sponsorship, including gold, silver, and bronze tiers. 

Don’t waste another lucrative sponsorship opportunity by guessing at your value. Book a call today.